The global economy is going to collapse in 2023 according to the world's largest investment Banks And clearly as they are the world's largest investment banks with armies of analysts doing maths and numbers and they of course know exactly what's coming, every news Outlet over the last few days is telling you the world is about to end. A YouTubers are queuing up for Imodium tablets to make the most constipated thumbnail possible because in 2023, we are going to have a super bad recession. Or maybe a depression. Maybe a depression caused by a recession. Or maybe a hairline recession caused by a depression caused by the worst ever recession. And you can see that the biggest brains in the world are all in absolute unanimous agreement that the sky is about to fall in. look: Barclays are saying that the US economy will contract by 0.1 percent in 2023, and you know that they are totally legit and not talking out of their backside because this time last year, they predicted the global economy would grow by 4.4 percent in 2022, Which is of course, exactly what happened. The economic boom in 2022 has been unparalleled, and of course, the same brainiacs from Barclays also forecasted that inflation in the US would go away all by itself this year, without the need for the FED to raise rates. Absolutely bang on the money. BMP Parabola Are also confident that the US economy is going to fall next year. about as confident as they were at this time last year. That, of course, this year, the stock market is going to absolutely boom and explode. So you know that you can trust these guys wearing expensive suits working in massive Towers in New York and London they work in investment Banks And they say that the stocks are going to go up when the market goes up, and they also tell you that the stocks are going to go down when the stock market is already down. The ultimate mood reinforcement strategy of somebody who has no idea what they're saying. that is particularly popular with YouTubers And it's interesting how the move has changed in the last few months. Everyone seems despondent. Of course, the stock market is going to collapse. Next year, we might all go and live in a bunker. The great reset is coming. The World Economic Forum is using albino babies and Mysterious World Domination rituals. The Illuminati controlled the governments of every country. Everything you know is a lie. I Look out into the interweb and I see complete capitulation. Michael Berry is perfectly predicting the 70th stock market crash in the last 15 years. Crypto is imploding after the 14th straight year of Crypto's only use in the real world being to scam people out of money. Finance YouTubers Have decided that made-up tweets about the impending collapse is the way to go and me: I am looking at all of this and feeling like I am the odd one out. A typical bear market for the S P 500 apparently lasts 11.1 months with an average cumulative loss of 31.7 and so far this year we're approaching exactly 11 months. This chart is a bit out of date and the lowest point so far was about 25 down. So as far as averages go, we're pretty much bang on where the average bottom tends to be. But of course there are lots of examples where the market Falls a lot further. three drops of over 1.5 years in the 60s, 70s, and 80s and this one that fell for 1.7 years being the last time we had high inflation and recently we had two very long Bear markets if you ignore the tiny upticks in the middle of them. The.com crash lasted two and a half years and a financial crash in 2008 lasted over two years. So there is precedent and you can see that the typical shape of the bear Market curve Peaks right at the end of the bear Market Things tend to get really bad just before things suddenly improve and we haven't seen that yet. so it's possible it's very possible that it could yet get worse, but seeing as I don't practice black magic and I did not predict the future using tarot cards I have no idea what is actually going to happen and because I have no idea I try and look at data and for me, the data is just not supporting the argument that the worst financial crash in history is about to happen. I Mean it might because the stock market does stock market things like Tesla Stock Falling by over 25 in three weeks for no apparent reason other than Elon Musk doing a bit of tweeting. but U.S Inflation data for October came in a lot better than expected. and critically, it wasn't all energy driven inflation and food slowed down for the first time during this inflation. Spike and commodities are also down for the first time. Oil prices are down to around 82 dollars, same as they were back in early January a month and a half before Russia's invasion of Ukraine Gas prices remain elevated, but they have come down a lot since the massive Peaks Earlier this year, retail sales are still hanging on, and despite the high level of inflation, U.S wages have not been going up anywhere near as fast, which means that real-time wages are falling and at the same time unemployment remains at historically extremely low levels. This is a unique situation that we haven't seen before. These are all extremely positive signs because all, although there was a substantial risk of the inflation wage spiral taking off earlier this year, it just hasn't happened. And this means that people are facing a cost of living crisis. which kinda sucks right now because you are stressed about money. People can't afford things like we used to. but it's also the ultimate cure for high inflation because this is exactly what kills demand and stops prices spiking. And we're already seeing the effects of that in the inflation data in October Since World War II the average recession has lasted 10 months, which is shorter than recessions before the Second World War because the market is now more Dynamic it's less insular. it's more global technology is advancing the pace of change. Things are reacting and counter-reacting more quickly. and today these factors are only more prevalent than they have ever been. What's even more important is that if we use the old definition of a recession as two consecutive quarters of a four in GDP, then the US was already in a recession in the first half of this year. And even with the preliminary Q3 data showing a massive 2.6 rise massive in relative terms, the year to date is still basically at zero, and we're 11 months into this year. there have been some job losses. We saw all the news about big tech companies laying people off in the last few months, but these are headline grabbing figures while the overall underlying data on employment is surprisingly robust unlike other major recessions when we saw huge job losses during that recession as a result of that recession happening. Now, maybe we're still early, maybe that's all going to come next year and it's gonna get incredibly bad. Or maybe this is the stimulus for a huge bounce back in the economy next year instead because of the unique combination of circumstances we have never seen before. Given the falling commodity prices and the drop in energy, inflation data for November is likely to look good again, with the headline figure likely to fall further from the 7.7 figure we saw in October and the FED has been making noises about how they are going to jack a race no matter what, they're going to destroy inflation. But if inflation comes in better again, falling from a peak of 9.1 percent in June to something like seven and a half or seven point six percent in November. The Fed's announcement comes the very next day after that inflation data comes out, and it could surprise people a lot. Having said that, remember that inflation is a relative measure and when we come to the December data that we'll see in January, inflation is likely to jump up again and we might have a lot of hysterical headlines YouTubers holding their head and their hands going. Oh my goodness, there's a fire behind me. but you can see that in December Last year gas prices fell sharply compared to September October and November down by over 30 percent. An oil price also fell. It was at around 80 in November and fell down to 65 on December 1st. So when we're comparing data year on Year, we will see the prices in November looks kind of similar to the prices is that we saw last November But when we move along a month suddenly if the prices stay the same in December this year, it will actually be a big relative increase compared to the same time last year. but at the same time if the prices do not Spike back up over the next few months. then when we're looking at February data. next year when we're looking at March data, Energy prices will suddenly begin looking a lot cheaper in the CPI and I wonder what sort of headlines we're going to see if inflation suddenly does look a heck of a lot better and the FED begins looking at slowing down rate hikes and eventually turning to stimulation again as an investor. I Am looking at the stock market that has already sold off massively this year and the important question is, do you think that the potential upside from here to wherever the bottom is if you try to time it multiplied by the probability of that potential upside coming through. Do you think that is worth more than the potential upside if the 100 definite absolute certain? no doubt 2023 market crash does not and end up turning up multiplied by the relative likelihood of that happening. And even more importantly, what is the opportunity cost of missing the very bottom versus the opportunity cost on missing on whenever the rebound does happen. A common problem with investors is that many will choose to chase a higher reward outcome that carries low expected returns. When you account for the probability density of the potential outcomes, putting all of your chips on red can double your chips on the very next spin of the roulette table. But if you go and keep betting your chips on red over and over, the long-term expected return is negative and there is a reason why. I Personally do not like playing games like the roulette. I have absolutely zero interest because I know that the odds are stacked against me and I prefer not to play stupid games to win stupid prizes. There are a lot of companies out there trading at extremely low valuations right now. Some of them are trash. Those are going to fall further for sure. There's probably a lot of those, but there are many growth stocks within this overall stock stock market. Many earlier stage companies that have seen 70 to 80 percent of their share price wiped out for no particular reason, certainly for no reason related to their performance because every single grow stock has had the exact same sell-off irrespective of the fundamentals. and I'm the kind of guy who doesn't look. A Gifted horse in the mouth. Call me simple, but the funny thing is simple is actually the hardest investing strategy in the world. Most people know what they should do, but they don't do it. And so when your favorite chocolate bar is on sale at the supermarket for 70 off, you decide that maybe you should wait until next week because next week it might be at 75 percent off or it might be back to full price. And it sounds funny when you use this chocolate bar in a supermarket analogy because of how painstakingly simple it is. But this is exactly the sort of gambling behavior that we see every day in the stock market. And this is exactly why the vast majority of active investors will lose to the stock market in the long term. Talking about patients and make can calculated long-term moves is a heck of a lot easier than actually being patient and making those calculated long-term moves.